Evaluate methods of government intervention which could be used to reduce the market failure associated with disposable vape waste. Use a market failure diagram to support your answer.

Figure 1: Trend in the disposal of non-recyclable disposable vapes sent to landfill or incorrectly incinerated (in millions), UK, 2018 to 2025

Extract A: 50p environmental levy continues to discourage use of disposable vapes

A statutory 20p charge on single-use disposable vapes was first introduced across specialist retailers and convenience stores in 2020. The charge was subsequently increased to 50p in 2024 and extended to all supermarkets and online distributors.

The UK Environment Minister stated that the environmental levy has successfully disrupted the unthinking purchase and disposal of millions of plastic and lithium-ion vapes, thereby reducing electronic landfill volumes and generating millions of pounds in ring-fenced revenue to fund regional battery recycling facilities. Without this policy, standard market mechanisms could not resolve the environmental externality. Consumers have rapidly adjusted, with many switching to reusable and refillable pod systems.

In tandem with the levy, major vape brands have introduced pod deposit-return schemes and in-store drop-off points, giving consumers clear financial incentives to return spent devices.

However, trade associations report that cost-conscious consumers remain hesitant to pay the upfront premium for rechargeable starter kits. With real disposable household incomes falling by 4.2% in 2024, sales of higher-end eco-friendly reusable vaporisers are projected to drop from 320,000 to 190,000 units this year.

Extract B: Lithium and electronic waste packaging tax

E-cigarette manufacturers have voiced concerns over the implementation of a new environmental tax on packaging and heavy metals, warning it will drive up retail prices for average consumers.

The packaging and materials tax, introduced in 2023, is designed to incentivize firms to use recycled materials in their production lines. Under the regulations, any business importing or manufacturing 5 tonnes or more of electronic vaping devices containing less than 50% recycled plastic or lithium faces a tax of £450 per tonne. Devices exceeding this 50% threshold are completely exempt from the tax.

Helene Dupont, Chief Executive of the National Vaping Alliance, noted that passing the added tax burden onto consumers is an inevitable consequence of the legislation: "This creates cost-push pressures right through our complex importing and manufacturing supply chains. Smaller independent vape brands will struggle to absorb these compliance costs." A diverse group of importers and packaging firms are affected, particularly because single-use systems represent approximately 40% of the total electronic waste stream from youth demographics.

Extract C: College recycling bins and behavioral nudges

An estimated 5 million disposable vapes are thrown away across the country each week, generating substantial chemical and plastic waste. Academic research indicates that while a 60p surcharge on non-recyclable vapes successfully drives students toward reusable alternatives, a corresponding 60p discount on eco-friendly starter kits has a negligible effect on consumer habits.

Specifically, a 60p surcharge on single-use vapes increases the utilization of reusable systems by 6.2%. Introducing simple environmental nudges in college communal spaces—such as clear prompts, posters, and dedicated battery-disposal tubes—increases disposable vape recycling by 4.5%. Ensuring that recycling bins are easily visible at point-of-sale displays boosts recycling by 3.8%, whereas distributing free prepaid shipping envelopes to young adults results in a substantial 7.8% increase.

"While individual measures trigger relatively modest behavioral shifts, combining financial penalties with informational and physical changes yields the most significant reduction in hazardous waste," concluded Wouter Poortinga, Professor of Environmental Psychology.